Excellence in Operational Risk Management

[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”2/3″][vc_tta_tabs][vc_tta_section title=”Description” tab_id=”1464090763057-1b8d07df-5e3f”][vc_column_text]Course Objectives

The goal of this two-day workshop is to build an understanding of the importance of operational risk management within the Banking and Finance industry. Specifically, participants will be equipped to:

  • Identify the sources of operational risk and how these arise within the context of financial institutions main business activities.
  • Understand the governance structures, systems, procedures and cultural aspects necessary for an organisation to successfully manage operational risk.
  • Build a knowledge of the main techniques for the measurement and quantification of operational risk and their relative merits and drawbacks.
  • Appreciate the approaches available to a bank under Basel III for the calculation of regulatory capital for operational risk and the supervisory requirements for each approach.

Analytic Overview

The aim of this section is to understand the nature of operational risk, identify typical occurrences of operational risk within a bank’s business model, and to consider external perspectives on the importance of operational risk management in rating and banking supervision.

  • Importance of Operational Risk as part of the firms risk inventory
  • Understanding the nature of operational risk: “Dimes and disasters”
  • Current industry drivers of increasing operational risk in financial institutions; complexity, innovation, technology, transaction velocity and litigation
  • Motivations to manage operational risk: financial loss, legal and regulatory requirements, reputational risks, capital management and planning
  • Management perspectives/requirements; understanding the risk, information systems, quantification, mitigation and hedging decisions, cultural and behavioural aspects
  • Identifying categories of operational risk in financial institutions:
    • Core operational capacity
    • People risks
    • Client relationships & Fiduciary risks
    • Transactional systems
    • Safe custody
    • Reconciliation and reporting
    • Fraud
    • Legal risk
    • Change and new activities
    • Expense volatility
  • Exercise: Identifying sources of operational risk across business lines in a major financial institution
  • External perspectives on operational risks:
    • Incorporation of operational risk criteria in rating agency methodologies
    • Regulatory and industry perspectives on the importance of operational risk control

Operational Risk Governance
The objective of risk management is to add maximum sustainable value to the activities of an organisation. It therefore needs to be a continuous and developing process that operates in conjunction with the development and implementation of the organisation’s strategy and whose aim is to increase the probability of achieving the overall objectives of the organisation and reduce the probability of failure.
To achieve this, operational risk management must be integrated into the organisation and led by the most senior management. This section of the course will therefore look at the key role of the board in setting an organisation’s operational risk policy and the key characteristics of how it is implemented.

  • Risk management process – Operational risk as an integral part of the enterprise risk management framework
  • Operational risk policy – the key components of an organisation’s risk policy.
  • Roles and responsibilities – of the board, senior management and support functions.
  • Evaluating corporate governance standards
  • 3 lines of defence – an explanation of the traditional three lines of defence and the allocation of risk responsibilities.
  • Exercise: Corporate Governance
  • Operational risk framework – how the components of operational risk management fit within strategy and risk policy.
  • Operational risk cycle – the components of the risk cycle: identification; assessment and measurement; mitigation and management; monitoring and reporting.
  • Regulatory perspective – rules and guidance on operational risk governance and risk management structures; IMMR framework; BIS Guidelines
  • Case study: Operational Risk Governance

Management of Operational Risk
The objective of this section is to consider the main techniques used to identify and to manage operational risks, within a financial institution environment.

  • Objectives of operational risk management; avoidance of catastrophic losses, promote organisational understanding of operational risk, anticipate risks more effectively, objectively measure performance, change culture and behaviours, streamline products and services and ensure that adequate due diligence is performed in any takeovers or merger
  • Understanding the firm’s operational risk profile
    • Risk profiling
    • Risk control and self-assessment analysis
    • Key risk indicator analysis
  • General Operational Risk Management Techniques:
    • Internal data collection, parsing and emerging risks identification
    • Use of external event data
    • “Lessons Learned” processes
    • Scenario analysis techniques
    • Impact of new products, processes, business lines & locations
  • Specialist Operational Risk Management Areas
    • Objectives and good practice in the management of Legal Risk
    • Fraud and Anti-Money Laundering requirements
    • Business Continuity Risk
    • IT Infrastructure Risk
  • Exercise: Applying risk profiling and mitigation techniques to typical operational risks encountered within a financial institution
  • Mitigation of residual operational risks
    • Outsourcing: Typical outsourced operations, gains and losses in terms of organisational risk profile
    • Mitigation choices: the “ATAC” matrix
    • Insurance as a mitigant to operational risk
  • Building an operational risk management culture
    • Understanding what causes poor risk management cultures
    • Changing culture to take account of operational risk
  • Case study: Early warning signs of poor operational risk management

Quantifying Operational Risk
The aim of this section is to explore the main techniques which are applied with the financial services industry to quantify operational risk, their relative strengths and weaknesses, and also to consider the problem of “unquantifiable” aspects to operational risk measurement.

  • The fundamental challenges of quantifying operational risk and the operational risk loss curve.
  • Approaches to measuring operational risk; expense-based, income volatility, top-down and bottom-up modelling approaches.
  • Operational risk databases
  • Measurement Techniques:
    • Probability & impact matrices.
    • Scoring risk impacts.
    • Exercise – scoring risk processes and using a probability and impact matrix
    • Power Law and Extreme Value Theory
    • Applicability of Value at Risk (VaR) and Conditional VaR techniques to operational risk?
    • The Loss Distribution Approach
  • Quantifying the additional cost aspect of operational risk: franchise damage, opportunity costs, reputational risk, credit spread and equity costs.

Bank Regulatory Capital Requirements for Operational Risk
This section aims to demonstrate how the management and measurement techniques explored in the previous sections are applied by the Basel II and III capital accords.

  • The challenges of calculating unexpected versus expected loss for operational risk
  • Exercise: Identifying expected versus unexpected loss for operational risk
  • Fundamental Basel approaches for operational risk capital requirements
    • The Basic Indicator Approach
    • The Standardised and Alternative Standardised Approach
    • The Advanced Management Approach (AMA)
  • Regulatory criteria for adoption of Standardised and AMA approaches
  • The Advanced Management Approach
    • Classification of risks under the AMA
    • Qualitative risk management standards
    • Quantitative system and data standards
    • Typical methodologies and system architectures employed under the AMA
  • Pillar 2 and Pillar 3 requirements for operational risk
  • A review of implementation standards and regulatory capital allocation at major global banks.
  • Case study: identifying and comparing the elements of operational risk capital systems at major global banks

[/vc_column_text][/vc_tta_section][vc_tta_section title=”Objective & Methodology” tab_id=”1464090763132-aba53f33-2e34″][vc_column_text]This workshop will enable participants to:

  • Internalize the latest best practices in operational risk management and apply them.
  • Understand how to capture, report and investigate operational risk events, how to produce meaningful Risk Management Information including Key Risk Indicator (KRI) data and trend analysis, and how to implement operational risk appetite

Apply the best practice models and methodologies for operational risk management on a day to day basis.


The workshop will focus on the application of cutting edge global best practices, cases and experience to the conduct of operational risk management in financial institutions. The course will deliver intensive training, and blend discussion with case studies from global financial institutions allowing the participants to apply the concepts to ongoing practice, thus becoming more effective risk managers.


[/vc_column_text][/vc_tta_section][vc_tta_section title=”Target Audience” tab_id=”1464091130470-691e0053-b189″][vc_column_text]This program is relevant to all risk and/or operations related roles in global banks including their centres of excellence located offshore.[/vc_column_text][/vc_tta_section][vc_tta_section title=”Faculty” tab_id=”1464091428558-76998227-e1f2″][vc_column_text]

Dr. Ranjan Chakravarty

Dr. Chakravarty’s global reputation and experience in risk management and risk control spans over 22 years and senior leadership positions in top tier international banking and financial institutions acrossWall Street, Europe and Asia.  His expertise covers all aspects of Operational, Credit and Market Risk.

A specialist in risk management at Bankers Trust New York (now Deutsche Bank),  BankBoston (now Bank of America Merrill Lynch)and GE Capital in the US,  he was an early developer of stress testing and scenario analysis methodologies and one of the investment banking industry’s first  implementers of RAROC.  He was accorded the honor of being one of the select group of  delegates to the BIS Group of 30, the precursor to the Basel accords, enabling him to have consistently been at the forefront of the Basel regulations as they have developed over time.

A natural pioneer in Basel II and III implementation, Dr. Chakravarty’s work has been audited extensively by regulators in Germany, Japan, Hong Kong and Singapore. In Asian institutions,  he has been Managing Director at DBS Bank, Singapore where he led the global middle office, and Head of Risk, Research and Products for MCX-SX. Till recently he was the Monetary Authority of Singapore approved Chief Risk Officer of  the Singapore Mercantile Exchange and Clearing Corporation, and has implemented many cutting edge methodologies, policies and procedures therein, as per CPSS-IOSCO-MIFID-Basel III guidelines.

Currently a consultant and trainer to financial institutions, Dr. Chakravarty blends best practice and research, and co-authors with faculty at the National University of Singaporeon specialised finance topics including developing cutting edge case studies.  He also is a Professor at a leading Indian business school. An alumnus of Columbia Business School, University of Texas at Arlington and Syracuse University, Dr. Chakravarty’s research has been published in the Journal of Banking and Finance (in the same issue as Hull and White) and has been cited in leading journals. He has appeared on Bloomberg and his opinions on risk have been quoted in publications like Derivatives Strategy and across the financial press worldwide.[/vc_column_text][/vc_tta_section][/vc_tta_tabs][/vc_column][vc_column width=”1/3″][vc_column_text]Register_Now


How to Register:

• Fees: Rs. 36,000 /- + 15% service tax per person.
• Please write to register@princetonacademy.co.in/Call -022 66976892/74
• Mention the name of participant, company, contact details.

• Fees include lunch, tea, course material etc.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]register_button[/vc_column_text][/vc_column][/vc_row]